While there may finally be an end to the coronavirus in sight, health and safety continue to be top priority for contractors and homeowners alike. COVID could impact your wood project negatively just like it has impacted many of our national industries in ways unforeseeable. From mid-March to early September of 2020, The Farnsworth Group took a look at how contractors are faring in the midst of all the chaos. What did they find? Things have changed.
Here are 3 ways COVID could impact your wood project:
The Farnsworth Group projected project delays expanding from just 1-3 months, to 3 months plus, past September 2020. Why? It is taking longer for materials to reach your manufacturers, and taking longer for those materials to get from your manufacturers, to you. Builders currently have to search harder and pay more to get the materials they need. For businesses who typically buy their lumber inventories weeks in advance, the current situation has resulted in some panic buying as they try to stay ahead of the competition, gain a share of limited inventories, and try to maintain their build schedules. Trucking these materials, and coordinating deliveries, have all been complicated due to this issue- which has substantially slowed the process and has impacted all parties involved.
Pandemic-induced mill shutdowns are adding thousands of dollars to the cost of new homes and could dampen the industry’s contribution to economic recovery. With lumber mills slow to reopen in an uncertain economy, and growing demand for new homes, the price of lumber jumped to about $800 per thousand board feet in August of 2020. Following this historical increase, The National Association of Home Builders sent a letter to President Donald Trump, asking him to reach out to domestic lumber companies, and encourage them to ramp up production to meet the demand. They’re also asking the president to reopen trade talks with Canada and reach a new agreement on softwood lumber imports. The association said U.S. tariffs on Canadian lumber are averaging more than 20%. The shutdown of many of our mills across the country has left us without much of a means to an end of this continual increase in demand.
Supply and demand are completely out of sync. Taking a closer look, it is clear that the pandemic is the reason why. The demand for lumber increased dramatically during the summer months of 2020, as interest rates for home mortgages and new construction financing fell. Softwood lumber prices are now about 112% higher than they were a year ago and have jumped 10% in just the past week. Housing starts surged by 17% in June 2020, month over month. In July 2020, new construction surged again by 22.6% over June – well above market forecasts. Low-interest rates are heating demand for housing and giving builders more incentive to increase production.
“Favorable interest rates and increased pandemic-related demand for remodeling have given architectural and design firms confidence for Q1 compared with the previous quarter,” says Marine Sargsyan, senior economist at Houzz. “Yet, construction businesses have tempered their expectations slightly as they continue to face supply chain constraints, labor shortages, and increasing costs for materials, such as lumber.”
As a result, lumber prices are up, astronomically so compared to prices over the last two decades, but they are expected to come down as the pandemic eases.
Here at Durango Wood Company, it’s never been easier to get the look you want at a price you’ll love. Our wood products offer the style and quality you need to turn your vision for your new home or remodel into reality. Give us a call and get started today!